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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
Dated this the 29th day of January, 2013
PRESENT
THE HON’BLE MR JUSTICE D V SHYLENDRA KUMAR AND THE HON’BLE MR JUSTICE B SREENIVASE GOWDA
Income Tax Appeal Nos. 1100 of 2006 & 33-34 of 2013 BETWEEN:
M/S SANKHLA POLYMERS (P) LTD REP. BY ITS DIRECTOR SRI RAMESHCHAND P # 2, I FLOOR, RACE COURSE ROAD MADHAVA NAGAR BANGALORE.
… APPELLANT
[By Sri A Shankar, Adv. & Sri M Lava, Adv.]
AND:
THE INCOME TAX OFFICER WARD - 12(2), R P BHAVAN, NRUPATHUNGA ROAD BANGALORE
… RESPONDENT
[By Sri M Thirumalesh, Adv.]
THESE APPEALS ARE FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 28.02.2006 PASSED IN ITA NOS. 1323, 1324 & 1325/BAN/2005, FOR THE ASSESSMENT YEARS 2002-03, 2003-04 & 2004-05, PRAYING TO SET ASIDE THE SAID ORDER OF THE TRIBUNAL AND ETC.,
2 THESE APPEALS COMING ON FOR HEARING, THIS DAY, SHYLENDRA KUMAR J., DELIVERED THE FOLLOWING:
J U D G M E N T
This appeal by an assessee under Section 260A of the Income Tax Act, 1961 [for short, the Act], though is given one number, it is clarified by Sri A Shankar, learned counsel for appellant-assessee that the appeals related to three assessment years viz., 2002-03, 2003-04 and 2004- 05 and therefore the assessee has paid commensurate court fee for three appeals.
Registry is directed to take note of this position and assign two more appeal numbers.
The common order dated 28-2-2006 [copy at Annexure-A to the memorandum of appeal], passed by the income tax appellate tribunal in respect of the three assessment years in question is challenged in these appeals and arguments are addressed in common.
3 4. The assessee is a company registered under the provisions of Companies Act, 1956 and the controversy in the appeals is with regard to the assessee company’s liability for payment of tax for the three assessment years in question, as levied under the provisions of Section 115JB of the Act. The provisions of Section 115JB though had come on the statute book with effect from 1-4-2000 as per the Finance Act, 2000 and is applicable for the assessment year 2001-02 onwards, it was amended by the Finance Act, 2002 and was made operative from 1-4-2001 and the amending Act though, in fact, received the assent of the President only on 11-5-2002, it is being made applicable from an anterior date i.e. from 1-4-2001 itself. To this extent, the question arises for the assessment year 2002-03 with regard to the application and operation for this assessment year. The amendment was for making the book profits as deemed taxable income of the assessee company under the circumstances explained and this income was to be charged at 7½% of such income.
4 5. Prior to this amendment, while the charge was with reference to the amount of book profit i.e. 7½% of the book profit, a possible apprehension that a reference only to the book profit as taxable can invite a challenge to the levy and this was sought to be redressed by this amendment by the amount of book profit being deemed to be the income on which charge is made operative under Section 115JB of the Act.
Be that as it may, in so far as the controversy relating to the question of levy of tax at 7½% on the deemed income, which is book profit of the assessee is concerned, the assessee had challenged such levy and charge and such contentions of the assessee has been negatived by the assessing officer while reassessing the income for the assessment year 2002-03 by issue of notice under Section 148 of the Act and tax liability had been determined as per the amendment to Section 115JB.
5 7. For the subsequent two assessment years, the assessee being fully aware of the provisions of this Section and having filed returns, they had been assessed.
The assessee had opposed the levy on various grounds and mainly contending that in so far as its income from a newly established industrial unit in Silvassa, a notified backward area, is concerned, the assessee enjoyed an incentive under Section 80-IB of the Act; that its entire income attributable to this activity was allowed as exempted income and therefore the taxable income of the assessee was not as determined by applying the provisions of Section 115JB of the Act; that a determination under Section 115JB of the Act was virtually taking away the exemption given to the assessee i.e. exemption given under Section 80-IB of the Act is sought to be taken away by the provision of Section 115JB of the Act and that cannot be permitted to the detriment of the assessee; that the principle of promissory estoppel
6 operated against the revenue and the principle of legitimate expectation operated in favour of the assessee and a combined effect of the two was to ensure that in so far as the assessee-company is concerned, for the duration of period during which the assessee company enjoyed the concession under the provisions of Section 80- IB of the Act, irrespective of the provisions under Section 115JB of the Act, providing for minimum alternate tax, the tax liability of the assessee-company cannot be computed on such basis for violating such principles, which have not only recognized statutory provisions, but has come in for judicial interpretation and therefore the assessment order was bad in law etc.
Appeals to the appellate commissioner and further appeals to the income tax appellate tribunal in respect of all the three years having failed, the assessee is in appeal before this court. The appeals had been admitted to examine the following substantial questions of law:
1) Whether the tribunal was justified in law in holding that the provisions of Minimum Alternative Tax under the provisions of Section 115 JB are applicable to the appellant on the facts and circumstances of the case?
2) Whether the tribunal erred in not adjudicating the contentions of the appellant in respect of exempted income under the provisions of section 80 IB should have been reduced while computing the books profit under section 115 JB of the Income Tax Act.
3) Whether the Tribunal erred in not adjudicating the ground regarding chargeability to interest under the provisions of section 234 B and 234 C especially in relation to the provisions of Section 115 JB on the fact and circumstances of the case.
We have heard Sri A Shankar, learned counsel for the appellant-assessee and Sri M Thirumalesh, learned standing counsel for the respondents-revenue.
Sri Shankar has firstly submitted that in so far as the assessment year 2002-03 is concerned, an additional question relating to justification of levy of interest under
8 Section 234B of the Act is though disputed for all the three assessment years, is now fully covered in favour of the assessee, holding that such levy for this assessment year and levy of interest for non-payment of the advance tax instalments in time is not justified not only as per the rulings of this court in the case of The Commissioner of Income Tax vs M/s Jupiter Bioscience Ltd [ITA No 181 of 2007 c/w ITA No 737 of 2006, decided on 3-8- 2011], taking the view that as the provision itself was brought on the statute book with effect from 11-5-2002, though giving retrospective effect from 1-4-2001, the assessee being not aware of the requirement or of its liability only on 11-5-2002 and all instalments for computing advance tax were paid much prior to this date, nonpayment within time will not attract levy of interest under Section 234B of the Act and view the taken by this court in this decision, in fact, is supported by a similar view expressed by the Calcutta High Court while interpreting the very provision in the case of EMAMI LTD
9 vs COMMISSIONER OF INCOME TAX [(2011) 337 ITR 470 (CAL)]. Therefore, Sri Shankar would while assert and submit that the question has to be answered in favour of the assessee in so far as the question of levy of interest under Section 234B of the Act for the assessment year 2002-03 is concerned, for the subsequent assessment years, this question has not much been pressed into service, as it has already been held that such claim is not available to the assessee, as interest is applicable if assessee makes default in payment of instalments of advance tax.
In so far as the question relating to levy of tax under Section 115JB is concerned, Sri Shankar would mainly urge the ground of promissory estoppel and legitimate expectation, apart from pointing out to the existence of non-obstante clause not only in Section 115JB but also as can be read into the provisions of Section 80-IB of the Act, in view of Section 80-IA(5) of the Act, reading as under:
10 80-IA. Deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.:-
xxx
(5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made.
and it is submitted that with the presence of a non- obstante clause, both in Section 80-1B, as incorporated with reference to Section 80-IA, and Section 115-JB of the Act, the non-obstante clause as incorporated in Section 80-1B should prevail, as it is in consonance with the intention of the legislature in granting exemption in respect of the income earned by the assessee from out of
11 the establishment of industrial unit in a backward state, as notified, and this should be given effect to and in support of this submission, reliance is placed on the decision of the Supreme Court in the case of CENTRAL BANK OF INDIA vs STATE OF KERALA [(2009) 21 VST 505 (SC)], particularly, attention is drawn to the extraction of the principle with regard to understanding of a non- obstante clause incorporated into the statute and as interpreted earlier and which has been followed by a Constitutional Bench of Supreme Court in the case of MADHAV RAO JIVAJI RAO SCINDIA vs UNION OF INDIA [(1971) 1 SCC 85], relevant portion of which, as extracted in the former decision, reads as under: In Madhav Rao Jivaji Rao Scindia v. Union of India [1971] 1 SCC 85 Hidayatullah, C.J. observed that the non obstante clause is no doubt a very potent clause intended to exclude every consideration arising from other provisions of the same statute or other statute but “for that reason alone we must determine the scope” of that provision strictly. When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions
12 of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all along by itself. A search has, therefore, to be made with a view to determining which provision answers the description and which does not.
Submission is that it should be given effect to and if such interpretation should be accepted, there cannot be any ambiguity that Section 80-IB stands on its own and particularly the section making a reference as to ‘notwithstanding anything contained in any other provision of this Act’, this will prevail etc.
It is also contended by Sri Shankar that without prejudice to the contention regarding interpretation of a non-obstante clause, the provisions of Section 115JB are not at all attracted to the assessee company, having regard to the background in which Section 115JA, the predecessor to Section 115JB, was introduced to the statute book and the budget speech of the finance minister while introducing the Bill in the House and also to the subsequent board circular, which had followed the
13 legislation. Submission is that the object of levying a minimum alternate tax under Section 115JB was to levy tax on such of those companies which were though paying handsome dividends to its shareholders and had good amount of book profit, was, nevertheless, filing a return of nil income for the purpose of income tax and therefore were zero tax paying companies, while dividend was being declared and it is only in respect of such companies, the provisions of Section 115J or 115JA were sought to be operated upon, whereas the assessee company is not one such company; that it is not a ‘certain company’, as is referred to in Section 115JB for the reason that it has not declared dividends for the assessment years in question. What is highlighted is a tax under Section 115JB is not on all companies but only in respect of ‘certain companies’ and when as per the budget speech and as per the circular issued by the board, though in the context of Section 115JA of the Act, is, nevertheless, applicable in respect of the provisions of Section 115JB also and
14 therefore submits that the assessing officer and the appellate authorities could not have held that the assessee-company is liable to tax under Section 115JB of the Act. Submission of Sri Shankar, by drawing our attention to the board circular, is that the principle is well settled by judicial authorities and therefore no exception can be taken in the present case.
Submission is that the provisions of Section 115JB which follows the provisions of Section 115JA and Section 115JB had been introduced with a specific purpose and as noticed by the Supreme Court in para-4 of the judgment in the case of DYNAMIC ORTHOPEDICS (P) LTD vs COMMISSIONER OF INCOME TAX [(2010) 35 DTR 81], and the reference to the purpose and object of introducing this provision therein is relied upon to submit that it is only companies which are declaring dividends but not paying tax should be taken to be ‘certain companies’ to which the provisions of Section 115JB are attracted.
15 15. Yet another contention urged by Sri Shankar is that the principle of promissory estoppel operates against the revenue for levying tax under Section 115JB, as such levy virtually denies the exemption given to the assessee company under Section 80-IB of the Act and in support of this submission, he has relied on the decision in the case of KISHORKUMAR PRABHUDAS TANNA vs STATE OF GUJARAT [(2009) 23 VST 298 (GUJ)] and submits that though this is a judgment of Gujarat High Court and has persuasive value, this judgment is relied upon as it has only relied upon several earlier judgments of the Supreme Court for recognizing the principle of promissory estoppel and as noticed in this judgment and to contend that promissory estoppel operates even in respect of statutory provisions. It is also submitted that when once the state grants a statutory exemption, it has been well settled that such statutory exemptions granted should be honoured and cannot be taken away by subsequent alterations or denial of the exemptions.
16 16. The other ground and contention is a corollary of this argument i.e. the principle of legitimate expectation and it is submitted that when once the assessee company had set up its unit in a backward area, where the income is exempted for a specified period, till the expiry of the said period, the assessee company had legitimate expectation to enjoy the benefit of exemption and even a legitimate expectation being in the nature of an assurance in law if it flows out of the statutory provisions, that cannot be denied to the assessee company. For this contention, reliance is placed on the decision of the Supreme Court in the case of MRF LTD vs ASSISTANT COMMISSIONER (ASSESSMENT) SALES TAX [(2006) 148 STC 225 (SC)]. The principle as had been recognized in an earlier decision and as extracted in this judgment, reading as under: The principle underlying legitimate expectation which is based on article 14 and the rule of fairness has been re-stated by this court in Bannari Amman Sugars Ltd. v.
17 Commercial Tax Officer [2005] 1 SCC 625. It was observed in paras 8 and 9:
“A person may have a ‘legitimate expectation’ of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. It is generally agreed that ‘legitimate expectation’ gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallized right as such is involved.
18 The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words, where a person’s legitimate expectation is not fulfilled by taking a particular decision then the decision maker should justify the denial of such expectation by showing some overriding public interest. (See Union of India v. Hindustan Development Corporation AIR 1994 SC 988).
is relied upon.
Reliance is also placed on the decision of Supreme Court in the case of M P OIL EXTRACTION vs STATE OF MP [(1997) 7 SCC 592], wherein it has been held as under: It has been rightly contended by Dr Singhvi that the respondents legitimately expect that the renewal clause should be given effect to in usual manner and according to past practice unless there is any special reason not to adhere to such practice. The doctrine of ‘legitimate expectation’ has been judicially recognized by this court in a number of decisions. The doctrine of ‘legitimate expectation’ operates on the domain of public law and in an appropriate case, constitutes a substantive and enforceable right.
19 18. One another argument advanced by Sri Shankar is that under the provisions of Section 115JA of the Act, taxes that were being levied on the pook profit was at the rate as prevailed and in respect of the levy of tax even under Section 115JA in so far as it related to the capital gains was concerned, it was held to be at 20%, as laid down in the judgment of this court in the case of The Commissioner of Income Tax vs M/s United Breweries Ltd [ITA No 508 of 2001, decided on 26-11-2007] and therefore submits that this analogy in respect of an exempted income of an assessee i.e. income as is exempted under Section 80-IB of the Act and rate of tax should be levied even under Section 115JB should be taken to be zero per cent, as it is an exempted tax.
It is also submitted that in the situations mentioned in the explanation-1 to Section 115JB of the Act, reading as under: Explanation 1 – For the purposes of this section, “book profit” means the net profit as
20 shown in the profit and loss account for the relevant previous year prepared under sub- section (2), as increased by –
(a) the amount of income-tax paid or payable, and the provision therefor; or
(b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or
(d) the amount by way of provision for losses of subsidiary companies; or
(e) the amount or amounts of dividends paid or proposed; or
(f) the amount or amounts of expenditure relatable to any income to which section 10 or section 10A or section 10B or section 11 or section 12 apply,
if any amount referred to in clauses (a) to (f) is debited to the profit and loss account, and as reduced by, -
(i) the amount withdrawn from any reserves or provisions (excluding a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account:
Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below second proviso to section 115JA, as the case may be; or
(ii) the amount of income to which any of the provisions of section 10 or section 10A or section 10B or section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or
(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account.
Explanation – For the purposes of this clause –
(a) the loss shall not include depreciation:
(b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or
22 (iv) the amount of profits eligible for deduction under section 80HHC, computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A), as the case may be, of that section, and subject to the conditions specified in that section; or
(v) the amount of profits eligible for deduction under section 80HHE computed under sub-section (3) or sub- section (3A), as the case may be, of that section, and subject to the conditions specified in that section; or
(vi) the amount of profits eligible for deduction under section 80HHF computed under sub-section (3) of that section, and subject to the conditions specified in that section; or
(vii) the amount of profits of sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses.
Explanation – For the purposes of this clause, “net worth” shall have the meaning assigned to
23 it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986).
for the purpose of arriving at the book profits are only illustrative and not exhaustive and therefore the income attributable and given exemption under Section 80-IB of the Act should be read into this provision to effectuate the benefit conferred on the assessee under Section 80-IB of the Act when it conflicts with Section 115JB and for this reason also, no tax can be levied under Section 115JB of the Act.
It is, therefore, submitted that the authorities below are in error, particularly the tribunal, in holding that the assessee is liable to pay tax under Section 115JB of the Act and the questions posed for examination should be answered in favour of the assessee and against the revenue and the appeals should be allowed.
Such arguments are countered by Sri Thirumalesh, learned standing counsel for the respondent-revenue and
24 it is firstly contended that a non-obstante clause assuming that there is one such in sub-section 5 of Section 80-IA, to which reference is made, is only for the purpose of quantifying deduction that qualifies under this provision and it is for the limited purpose and not as though it can be a non-obstante clause to prevail over all other provisions of the Act. Submission is that the non- obstante clause is for the limited purpose of ascertaining the amount qualified for deduction under Section 80-IB of the Act and therefore it cannot be juxtaposed with Section 115JB of the Act.
With regard to the argument that it is only dividend paying companies which are referred to as certain companies in Section 115JB of the Act, it is submitted that the provisions of the very section and the explanation indicate that while computing the profits in respect of all types of companies, the manner in which it is to be ascertained for the purpose of Section 115JB having been
25 indicated, it is attracted to both dividend paying and non- dividend paying companies and therefore the argument that certain other companies includes only dividend paying companies is belied.
With regard to the principle of promissory estoppel is attracted, the assessee having paid the tax as per the amended Section 115JB by filing return later, shows that the assessee became aware of the same and there is no promissory estoppel operating. The argument on the principle of legitimate expectation is also answered in the like manner.
With regard to the budget speech of the finance minister, it is pointed out that the very speech of the minister refers to the drying up of sources to the revenue in view of the concessions given to many assessees and that while they may get good profits, no tax being paid and therefore the provisions of Section 115JB is introduced into the statute.
26 25. It is in the background of these submissions, we are required to examine the questions arising in these appeals and answer the same.
Section 115JB is in the nature of a special provision, a charging provision, and creating liability in respect of an assessee which is a company and whose taxes as determined on the returns filed in the normal manner falls short of the stipulated amount and a charge is created for making the difference i.e. the object of the legislation is to ensure a minimum tax of 7½% on the book profit as ascertained under Section 115JB is levied and collected from the companies whose payment of tax always without the application of this provision falls short of this amount of tax.
Though Sri Shankar, learned counsel for the appellant has called in aid not only the budget speech but also the circular issued by the board and the principles of promissory estoppel and legitimate expectation etc., we
27 are afraid none of these principles are attracted for the simple reason that a budget speech being only an introductory to the bill in the Parliament and that in itself is not an end.
Though many decisions are roped in for interpreting this, we find there is no scope for interpretation in the present situation, as the provision of the statute should be given effect to, as it occurs and if there is only any ambiguity in understanding the statute then only the tool of interpretation should be called in aid. We do not find any competing or derogatory provision in Section 115JB vis-à-vis Section 80-IB of the Act is concerned.
Section 80-IB operates in a particular sphere and Section 115JB is operative in a totally different sphere. It is not the case of the appellant-assessee that Section 80- IB is not operated or given effect to. Grievance of the assessee is that because of the operation of Section 115JB, the benefit of Section 80-IB is taken away.
28 Section 115JB occurring in a taxing statute is in the nature of a charging section and that too a special charging section, exemption or concession or any other benefit sought should come from within the provisions of Section 115JB itself, which occurs in Chapter XII-B of the Act. Section 80-IB is a provision which occurs in Chapter VI-A of the Act and a chapter which contains certain incentives and concessions given to an assessee on fulfilling the requirement specified in each section mentioned therein.
Section 80-IB in the first instance is not an exemption provision and it is only a provision providing certain concessions or benefit to an assessee and it does factor while computing the total taxable income of the assessee, as charged under Section 4 of the Act.
While this is not in any way denied to an assessee, Section 115JB is a special charging section for regulating tax liability of companies in general and made applicable
29 in particular and is confined to the assessee companies whose tax liability, when computed in the normal manner falls short of the liability as computed under this provision. Therefore, we are of the view that there is absolutely no question of Section 80-IB having any bearing or effect or control over the provisions of Section 115JB of the Act. It is to be noticed that Section 80-IB concession is in respect of those assessees who qualify for that and Section 115JB levy is confined to companies and such companies which are roped in within the scope of this section. It is because of this position, we are of the view that there is no occasion for the interpretation or examination of the principles of promissory estoppel or doctrine of legitimate expectation. The benefit under Section 80-IB is not denied, it works as it is. It is only because the assessee happens to be a company to which the provisions of Section 115JB is also attracted, levy as indicated therein becomes operative. Therefore, we do not find the applicability of the decisions relied upon by
30 the learned counsel for the appellant-assessee on this aspect of the matter, in the present situation.
In so far as the reliance placed on the judgment of this court in the case of M/s United Breweries Ltd [supra] is concerned, while that was with reference to the provisions of Section 115JA and we are now examining the liability under Section 115JB of the Act. The scheme of charging under Section 115JB being totally different and not with reference to general rate, but with reference to a specified rate as indicated in Section 115JB itself i.e. 7½% of deemed income for the purpose of Section 115JB, we are afraid the judgment will not advance the case of the assessee in the present situation.
A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of the Section 115JB, in the first instance there is no ambiguity, in the second instance, the ambiguity sought to be introduced on certain
31 premise which is not apparent and is only on a limited reading of the budget speech, at any rate a budget speech in itself cannot regulate or control the statutory provision, more so a charging section in a revenue yielding statute, we are of the clear opinion that the provisions of Section 115JB should be given full effect to without being influenced or guided or regulated by the budget speech of the finance minister. The board circular being in the context of the earlier provisions, but, nevertheless more by way of extraction of the budget speech, that by itself cannot have any special significance, as the board circular does not in any way seeks to clarify the levy and rate of levy as provided in Section 115JB of the Act. Levy and rate of tax alone is what matters for the purpose of Section 115JB of the Act.
Arguments are advanced by Sri Shankar, learned counsel for appellant-assessee based on principle of interpretation that Section 115JB should be so interpreted
32 or understood as to ensure that the benefit given to the appellant-assessee under Section 80-IB of the Act is not taken away and the interpretation suggested by Sri Shankar fails for more than one reason even on applying the principle of interpretation. Though there is no need for interpreting the provision and examination can only be in the context of understanding the scope of Section 115JB of the Act, nevertheless, if it is sought to be interpreted as contended by Sri Shankar in the backdrop of Section 80- IB of the Act, the principle of harmonious construction of a statute will have to be kept in mind. It is a well settled principle that no provision of an enactment should be so interpreted or understood as to render otiose or ineffective any other provision of the same enactment. Therefore, Section 80-IB cannot be interpreted so as to render the provision of Section 115JB of the Act nugatory or otiose or ineffective or does not achieve the purpose for which it is enacted.
33 35. Section 115JB, in fact, in no way either denies the benefit given under Section 80-IB or reduces the same. While the appellant-assessee can claim the benefit under Section 80-IB of the Act and it is not denied per se to the appellant-assessee, in the given case, the provisions of Section 115JB may be attracted or may not be attracted depending upon the nature or legal composition of the assessee.
In fact, the minimum alternate tax is sought to be levied earlier under Section 115JA and now under Section 115JB of the Act, only in respect of such companies which, by availing various concessions given in Chapter VI-A of the Act, are able to show either a nil taxable income or much reduced taxable income. Concession given under Section 80-IB is also one such and therefore no exception can be taken. Only in respect of the availability of a concession under Section 80-IB and to make it immune from the applicability of the provisions of
34 Section 115JB of the Act. Both provisions operate in their own respective spheres and have to be given effect.
Secondly and more importantly, no provision of a statute can be so interpreted as to render it unconstitutional. If the argument of Sri Shankar, learned counsel for the appellant, is to be accepted, then it will result in a discrimination against such assessee- companies who have to pay tax under Section 115JB of the Act, but have no concession available under Section 80-IB, whereas the tax liability of the person under Section 115JB of the Act, who can claim concession under Section 80-IB of the Act gets reduced for the purpose of Section 115JB of the Act. It is, therefore, to avoid Section 115JB being rendered discriminatory and unconstitutional being violative of Article 14 of the Constitution of India, the contention of Sri Shankar for reading down or reading up the provisions of Section 115JB of the Act, particularly by adding to different
35 situations mentioned in the explanation, to be expanded by including reference to Section 80-IB of the Act cannot be accepted. A statutory provision cannot be so read down to render it unconstitutional, but reading down a statutory provision is to make it constitutional and not otherwise. Therefore, the arguments fail.
However, in so far as the levy of interest under Sections 234B and 234C, liability for the assessment year 2002-03 is concerned, in the light of the decision of this court in the case of M/s Jupiter Bioscience Ltd [supra] and the view which is supportive of taken by the Calcutta High Court in the case of EMAMI LTD [supra] and more importantly the impracticability existing on the advance tax in respect of this year alone is concerned, the question relating to levy of interest under Sections 234B and C is concerned, it is answered in favour of the appellant assessee for the assessment year 2002-03. The other questions relating to levy of tax under Section 115JB, they
36 are answered against the assessee and in favour of the revenue and to this extent, the order of the tribunal is affirmed.
In the result, the appeal relating to the assessment year 2002-03 is allowed in part by answering the question No 3 relating to levy of interest under Section 234B and C of the Act in favour of the assessee and against the revenue and the assessment officer is directed to give effect to this judgment, in so far as the assessment year 2002-03 is concerned. In so far as other two appeals relating to assessment years 2003-04 and 2004-05 are concerned, all questions are answered against the assessee and in favour of the revenue and the appeals are dismissed in toto.
Sd/- JUDGE
Sd/- JUDGE *pjk